The Google Settlement Rejection: What Comes Next?

With the Google settlement rejected, parties ponder future

By Andrew Albanese
|

Mar 28, 2011

When it was introduced in 2008, the Google Book Settlement was hailed by its creators as historic. Now, it is history. On March 22, after more than two years of contentious debate, Judge Denny Chin rejected the controversial proposal on copyright and antitrust grounds. A status conference is set for April 25 in New York, and the parties are free (and some say likely) to appeal the decision, though at press time no appeal had been announced.

Seen as the solution to a straightforward copyright claim lodged by authors and publishers against Google in 2005, the settlement offered a complex blueprint for a new digital book business, a $125 million legal puzzle that involved a dizzying array of moving parts: thousands of authors, millions of titles, libraries, the public interest, murky copyright law, orphan works, and even the creation of a new central rights authority, the Book Rights Registry, all of which appear to be off the table now.

PW takes a quick look at what the settlement's rejection means for the parties and other stakeholders.

For Google

In legal terms, Google has the most to lose from the settlement's failure. Because it defiantly kept scanning throughout the legal process, those scans now loom as millions of potential infringements, with some observers estimating Google's total exposure at over $3.6 trillion. Google now has three obvious options. It can appeal and hope for a miraculous reprieve; it can negotiate a revised, scaled-down "opt-in" settlement; or it can litigate its original fair use defense. Litigating is terribly risky, experts warn, and therefore unlikely. But a scaled-back "opt-in" deal is not terribly attractive to Google, either, as it would pull millions of orphan works—the most valuable piece of the puzzle—out of Google's database, and would still not preclude other groups or individuals from suing Google.

No one should underestimate Google's ability to come up with a creative solution. In the meantime, however, most expect Google's legal team to play a delaying game until the Washington office hires enough lobbyists to pave the way for a legislative solution. "Google has been humbled," wrote media scholar Siva Vaidhyanathan, author of the Googlization of Everything, in a Slate op-ed that ran the morning after Chin's rejection. Perhaps, but while this may be the sharpest public rebuke in the company's short history, a bad bounce in its books program isn't likely to significantly affect Google's plans. In fact, Google stock actually rose after the rejection.

For Publishers

In 2009, when opposition first began to mount, publishers predicted disaster if the settlement failed. In a PW editorial, AAP president Tom Allen cited the newspaper industry and warned that a failed settlement would mean "years of continued litigation, and the serious risk of widespread free distribution of copyrighted material." The sky, however, has not fallen; far from it. Contrary to Allen's dire outlook in 2009, the settlement more or less faded into the background as the Kindle/iPad/Google-driven market for e-books has boomed. Practically speaking, publishers do stand to lose some found money. Google had agreed to pay publishers for scanning their long-forgotten, out-of-print books, which sure beats having to pay to digitize and host all these dead titles yourself.

But the settlement was never about money for publishers, it was about control, and on that score, they have effectively made their point: don't copy our books without permission. Macmillan CEO John Sargent, one of the deal's architects, suggested right after Chin's decision was made public that the publishers were eager to hammer out a revised deal. At this stage, a quick, revised settlement makes sense for publishers, while the prospect of running up legal bills over scans and snippets of long abandoned, out-of-print titles does not. If a quick, revised settlement is not to be, however, and indeed, it is no slam dunk, things could get interesting.

For the Authors Guild

In a statement, Authors Guild president Scott Turow said finding a way forward after the rejection was "a top priority," but he later backtracked a bit, telling reporters the Chicago Cubs may win a World Series before a new deal is approved. Indeed, the guild's leaders may find themselves in a tricky spot. For one, authors who want to partner with Google to make their books available don't need a settlement to do so—they can just sign up. Certainly, Chin's rejection of the deal's business arrangement for the future has to change the math for authors, and the guild may very well drive a harder bargain with Google in any new settlement that deals exclusively with past infringement, which, by the way, is what many guild members thought they were getting in the first place. Does $30–$60 per scanned book, the compensation offered under the rejected settlement to address past infringement claims, sound like a good return for five years of divisive legal action?

Adding to the pressure on guild leadership, the guild faced a minor insurrection in 2010 when award-winning author Ursula Le Guin publicly resigned over the guild's handling of the settlement. "May I dream?" Le Guin told PW when asked what she'd like to see happen with the proposed deal. "Scrap the whole thing, start over." Le Guin has now gotten her wish. Further complicating matters, the alliance between authors and publishers is fragile, with new, high-stakes battles over digital royalty rates heating up.

For Libraries

From the start, libraries have approached the deal with a mix of cautious optimism and concern. Of primary concern now is, absent a settlement, whether libraries face any legal exposure for their role in Google's scanning project. A brief is expected from the major library groups shortly. The immediate impact, however, is a net loss of access. Given the settlement's broad implications, it seems silly now that so much time was spent arguing over whether the one "free public access terminal" libraries were offered under the settlement was sufficient. In any event, that terminal is now gone, as is the vast subscription database of out-of-print and orphan works libraries would have had access to if the deal was approved.

Librarians were kept at arms length in the negotiations that led to the settlement, even though there would be no Google settlement without libraries, which offered their collections, time, and money to help build a corpus that now sits in limbo. The rejection could very well offer libraries something of a do-over, and a little public polish from libraries couldn't hurt the parties, either. In addition, the rejection highlights the complexity of issues facing libraries in the digital age, from a lack of funding to the murky laws complicating digitization efforts.

The Objectors

Lawyers have marveled at the impact the objectors had on Judge Chin's decision to reject the settlement. "His opinion recites many of the objections," New York Law School professor James Grimmelmann told PW. "He was clearly swayed by what he saw as a broad base of opposition to the settlement from a diverse group of class members." Objectors included a range of authors, international entities, competitors, and, for lack of a better word, idealists, all of whom clearly had a stake in the outcome, but were shut out of the private, secret negotiations that yielded the settlement proposal.

Perhaps the most pressing question now is how the objectors will move forward. Will they seek a broader consensus from stakeholders? The Open Book Alliance, a coalition that served as the settlement's most implacable critic, has already held out an olive branch. "OBA looks forward to participating in a collaborative process that will focus on developing an open digital public library." At the same time, how many of the objectors are winding up to take a shot at a piece of Google's fortune?

The Public

In a New York Times op-ed piece, Harvard University librarian Robert Darnton called the rejection a "victory for the public good." But without some unprecedented heavy lifting, it stands to be a very hollow victory. Throughout his decision, Chin invoked Congress, and Darnton along with a chorus of others have often called for Congress to step up and help create a national digital library. But will they? Can they? In 2009, Washington-based lawyer and library consultant Jonathan Band alluded to the increasingly ugly national debate over health care reform and asked a simple question: what makes anyone think Congress can strike a better deal? It's a fair point.

But Congress may now be the only option. That's because, taken at face value, Chin's rejection of the settlement's business arrangement for the future effectively removed the parties' only common ground. The parties that struck this visionary settlement did so only because they could not agree on a resolution to the simple question at the center of the initial lawsuits: does Google's digitization constitute copyright infringement?

The settlement may have been defended by the parties on its public benefit, but the public benefits derived from the settlement were in fact a byproduct of the copyright-related dysfunction plaguing the digital transition—and without some legislative change in the copyright arena, the parties are not likely to budge.

If there is a silver lining to the settlement's rejection, however, it is that the past two years of debate have reinforced how valuable a digital library would be, and exposed some of the critical fault lines in our copyright regime. In that sense, the architects of the Google settlement have moved the ball forward. As of this moment, however, the ball is on the ground.

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